In process costing, the costs flow from Raw Materials Inventory, to Work In Process Inventory, to Finished Goods Inventory.

Question

Quizplus · Accepted Answer

This is the basic flow of costs in process costing. Raw materials are added to the production process and become part of the work in process inventory. As production progresses, more direct materials and direct labor costs are added, and manufacturing overhead is allocated to the work in process. Finally, the finished goods are completed, and the total cost is transferred to finished goods inventory until they are sold.

In Process Costing, the Costs Flow from Raw Materials Inventory